Real Money

With consumer demand indicators picking up, participants in the music
instrument industry are optimistic about higher retail sales this year,
according to January survey results released today by GE Capital,
Commercial...

With consumer demand indicators picking up, participants in the music instrument industry are optimistic about higher retail sales this year, according to January survey results released today by GE Capital, Commercial Distribution Finance (CDF), a leading provider of financing to music dealers.

Thirty-eight percent of survey respondents expect their sales to increase five to 10 percent this year, while 43 percent expect increases of 10 percent or more. Last year, 26 percent expected sales growth of five to 10 percent and 54 percent expected growth of 10 percent or more.

Based on survey results, fretted instruments, percussion, keyboards and amplifiers will be the most popular category again — 44 percent this year versus 52 percent last year. Professional audio equipment will again be the second-most popular category — 37 percent versus 30 percent.

Online sales appear to be a growing component of participants’ business. More than one-quarter (27 percent) said online sales will comprise between 15 percent and 45 percent of their business this year, up seven percentage points from 2012. Slightly more than a third of respondents (36 percent) said online sales make up 15 percent or less of their business, down from 49 percent in 2012. And 17 percent say they do not offer online sales compared to 21 percent last year.

Despite the expected pick-up in consumer demand, participants in the music instrument industry are concerned about the growing popularity of online equipment sales. Forty percent of survey respondents said online retailer and auction site purchases would have the greatest impact on the music industry in 2013, up from 23 percent one year ago. At the same time, cutbacks in school music programs concern 19 percent of respondents, up from 12 percent in 2012. Concern about the lack of consumer demand has fallen to 18 percent from 43 percent.